Getting Your Pension In Spain - Guide For UK Expat Pensioners

Every year, thousands of UK pensioners retire to Spain's sunny Costas to enjoy the warm year-round sunshine and the relaxing, carefree lifestyle that it offers.

And why not? It's a well-known fact that living in the sun is better for our physical and mental health. The healing benefits of the sun, not to mention the Mediterranean diet, have been well documented. If you want to live to a ripe old age, retiring to Spain is a great choice. In a recent publication by the World Health Organisation, Spanish women had the second-highest life expectancy in the world. No wonder so many expats are coming to Spain.

Unfortunately, though, we can't live on sunshine alone. We all need a steady income to pay the bills and maintain our lifestyle. For pensioners, the main source of income will be a state or private pension. If you are retiring to Spain, it’s important to understand the process of claiming your pension, especially with recent updates for 2025.

Claiming Your UK Pension in Spain

There are two main scenarios to consider regarding where you will obtain your pension and how it will be taxed:

Scenario #1 – You Previously Lived in the UK and Have Never Worked in Spain

If you previously lived in the UK and are entitled to a state pension, you can have it paid directly to your bank account in Spain or the UK. The annual inflation increases ("uprating") to the UK State Pension continue to apply for British expats in Spain after Brexit, so your pension will rise each year as it would in the UK.

Before moving, you must inform the UK International Pension Centre (IPC) to avoid any payment issues, and complete the International Pensions Direct Payment Form. Get the form and guidance here.

You may also need to obtain a Certificado de Residencia Fiscal NEN - España Convenio from your local tax office in Spain as proof of Spanish tax residency. This ensures your UK pension is only taxed in Spain, not the UK.

Payments can be made every four or 13 weeks and, if paid into a Spanish account, will be converted from Sterling to Euros.
Even if you move to Spain permanently, you may still be entitled to some UK benefits such as Personal Independence Payment and Bereavement Benefits. Check your entitlements here. However, UK pension credit is not payable if you live abroad.

Contacting the IPC in the UK

If you have questions, contact the IPC:
International Pension Centre
The Pension Service 11
Mail Handling Site A
Wolverhampton WV98 1LW
United Kingdom
Telephone: +44 (0)191 218 7777
Textphone: +44 (0)191 218 7280
Monday to Friday, 8 am to 6 pm

Scenario #2 – You Have Worked Any Amount of Time in Spain

If you have worked and paid tax in Spain, you must apply for your UK pension through the Instituto Nacional de la Seguridad Social (INSS) in Spain. The INSS will coordinate your contribution records from all countries you have worked in, including the UK.

For more information on applying for your UK pension while living in Spain, visit this official INSS page.

To find your local INSS office, use the INSS office locator.

If dealing with Spanish paperwork is daunting, consider hiring a Spanish gestor for assistance.

For more on UK and Spanish pensions, including contribution and age requirements, see this detailed guide.

Important Pension Changes for 2025

• QROPS Transfers: As of June 2025, there are no longer any HMRC-recognised QROPS in Spain. UK expats cannot transfer their UK private pensions to a Spanish QROPS without incurring a 25% Overseas Transfer Charge, unless the QROPS is in your country of residence. The tax-free transfer cap remains at £1.073 million. This is a significant change for those considering moving their pension out of the UK.
• Inheritance Tax on UK Pensions: From April 2027, UK pensions may become subject to UK inheritance tax unless you have been non-resident in the UK for more than 10 years. This is important for long-term expats and succession planning.
• Spanish State Pension Age: The retirement age in Spain is gradually increasing and will reach 67 by 2027, unless you have at least 38.5 years of contributions (then you can retire at 65). To qualify for a Spanish state pension, you need at least 15 years of contributions, with at least two years within the last 15 before retirement.
• State Pension Top-ups: You can still make voluntary National Insurance contributions from Spain to increase your UK State Pension entitlement.

Taxation of Pensions and Tax Thresholds

Taxation: UK or Spain?

The UK and Spain have a double taxation agreement to prevent double taxation of your pension income. If you live in Spain, your UK pension (except certain government pensions) is taxed only in Spain. It is your responsibility to inform the UK pensions department and provide proof of Spanish tax residency. For guidance, see this HMRC guide.

UK government pensions (e.g., civil service) are taxed only in the UK. If a government pension is transferred to a private scheme, it becomes taxable in Spain.

Tax Thresholds

State and occupational pension income is treated as general income in Spain and grouped with your other income for tax purposes. Pension income receives a €2,000 deduction, with additional allowances depending on your income and age. For those on a low net income (less than €14,450 and no more than €6,500 from investments), a pro-rata allowance of up to €3,700 may apply.

Income is taxed at progressive rates from 19% (up to €12,450) to 47% (for €300,000+). Personal allowances for 2022 were:
Under 65 years – €5,500
65+ – €6,700
75+ – €8,100

Check the latest rates and how to file in our income tax return guide.

Declaring Foreign Assets

All residents in Spain must declare overseas assets (Modelo 720) annually by March 31. Assets include bank accounts, investments, insurance, annuities, and property. Severe penalties apply for incorrect, incomplete, or late reporting. This declaration is separate from your annual tax return.

Pension Lump Sums

Although pension lump sums are tax-free in the UK, this is not the case in Spain. If you wish to avoid paying Spanish tax on a lump sum, consider taking it before moving to Spain. Otherwise, it may be more tax-efficient to commute it into your pension pot and receive increased monthly payments. Seek professional advice for your circumstances.

Purchased Annuities

Purchased annuities are generally taxed favourably in Spain, with up to 92% tax-free on whole-life annuities if taken over age 70. Annuity income is taxed at a fixed rate of around 18%. Temporary annuities have a tax-free allowance of 75% to 88%. However, allowances can vary by region, so check locally.

Exchange Rates and Pension Income

Your pension will be paid in Sterling, but if deposited into a Spanish account, it will be converted to Euros. The amount you receive may fluctuate with exchange rates. Consider using a currency exchange specialist or exploring fixed-rate options to manage fluctuations.

As of June 2025, QROPS transfers from the UK to Spain are no longer available without a 25% charge. For alternatives, consult a qualified financial adviser.

Private Health Insurance for Expats

For peace of mind, consider private health insurance. Sanitas offers English-language policies underwritten by Bupa. See our range of plans here.

Summary

Retiring to Spain remains a popular and healthy choice for UK pensioners. However, with the end of Spanish QROPS, new inheritance tax rules from 2027, and changes to Spanish pension age, it’s more important than ever to stay informed and seek professional advice before making decisions about your pension and retirement planning in Spain.